2011 PLP (Trib (PTD)

SYED NADEEM SAQLAIN, JUDICIAL MEMBER.

Titled sales tax appeal has been filed at the instance of the registered person against the Order-in-Appeal dated 27-5-2010 passed by the Commissioner (Appeals), Faisalabad.

2. Briefly stated the facts of the case are that during the scrutiny of the records by the staff of post refund audit it was observed that Messrs Bashir Printing Industries (Pvt.) Ltd., Faisalabad received refund amounting to Rs.1,784,209 on invoices issued by the black listed/suspected registered persons, hence the appellant company is involved in tax fraud as defined under section 2(37) of the Sales Tax Act, 1990 (hereinafter called the Act) and evasion of sales tax and caused invoices without physical transfer of goods as envisaged under section 2(14) of the Act. Since the appellant was charged with the violation of sections 4, 7, 8, 8A, 10, 22, 26 and 73 of the Act read with relevant refund Rules and was called upon to show cause as to why input tax illegally received amounting to Rs.17,84,209 may not be recovered in terms of sections 11(2) and 36(1) of the Act read with relevant Refund Rules along with penalty and default surcharge under sections 33 and 34 of the Act. The adjudication proceedings culminated in passing of an Order-in-Original No.231 of 2009 dated 13-10-2009 wherein an amount of Rs.17,84,209 was ordered to be recovered from the appellants along with default surcharge under section 34 of the Act. A penalty under section 33(11) of the Act was also imposed. Being dissatisfied, the appellant preferred appeal before the learned Commissioner (Appeals) who vide Order-in-Appeal dated 27-5-2010 rejected the appeal of the appellant, hence the instant appeal.

3. Both the parties have been heard and relevant orders perused. At the very outset a preliminary objection has been raised by the counsel of the assessee that the adjudication order is time barred since the same was passed after the expiry of original time limit of 120 days and even after the extended time limit of 60 days (180 days in toto) as prescribed under section 36(3) of the Act. It was submitted that in the present case show-cause notice was issued on 19-02-2009 while Order-in-Original was passed on 13-10-2009, hence adjudication order as well as first appellate order being biased, vindictive, mala fide, false, illegal and void ab initio merits set aside. The learned D.R. on the other hand opposed the arguments advanced by the learned A.R.

4. I have heard the leaned counsel for both the parties and gone through the relevant orders. Admittedly, the show-cause notice in this case was issued on 19-2-2009 while adjudication order was passed on 13-10-2009 which is after the expiry of prescribed extended time limit of 180 days as defined in section 36(3) of the Act. It is pertinent to mention here that in the present case, show-cause notice was issued on 19-2-2009 and consequent order-in-original was passed on 13-10-2009 i.e. after about 236 days instead it should had been passed within 120 days of issuance of show-cause notice or within such extended period (shall in no case exceed 60 days). However, on expiration of original time limit of 120 days for adjudication, extension of another 120 days was sanctioned which was unjustified for the reason that as per section 36(3) of the Act extension can be granted for a period of 60 days after the expiry of original time limit of 120 days i.e. in no case exceed 180 days in toto. For the sake of convenience subsection (3) of section 36 is reproduced as under:-- "Section 36(3):- "Provided that order under this section shall be made within hundred and twenty days of issuance of show-cause notice or within such extended period as the Collecter may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed sixty days (Underlining is ours)." Reference was also made to the 2009 PTD 762 (H.C. Lhr.) wherein it has been held:-- "As is clear from the language of the above proviso, it has limited the scope of the exercising of the jurisdiction after issuance of notice to basically 90 days or such extended period as the Collector after duty recording proper reasons in writing has fixed. However, it is again subject to the limitation in the manner that the said extension also cannot be for more than 90 days. The period for deciding the order-in-original after issuance of a notice under section 36(1) and (3) thus is maximum 180 days including earlier 90 and extended 90 days. Obviously if the extension has been given by the Collector before the expiry of the earlier 90 days."

5. In view of the above discussion and the case-law cited supra, the appeal of the assessee is accepted and the show-cause notice issued after the expiry of prescribed extended time limit is ordered to be cancelled and all the proceedings initiated thereafter are order to be quashed.

6. It is ordered accordingly. H.B.T./131/Tax(Trib.) Appeal accepted.